The Fed just lowered its predictions for the economy in 2011 and 2012. As The Washington Post's Neil Irwin reports:

Top Federal Reserve officials project that the unemployment rate, now 9.6 percent, will fall only to about 9 percent at the end of 2011 and about 8 percent when the next presidential election arrives, in late 2012. The central bankers had envisioned a more rapid decline in joblessness in their previous forecasts, prepared in June.
So what does this actually mean? Obviously the news is not great from the perspective of the average American hoping for employment. But what's really got the online commentariat going is what this means for politics. Will the lagging economic recovery be to the Democrats' or the Republicans' advantage in 2012?
  • 'Bad News All Around,' begins Doug Mataconis at Outside the Beltway. "Economically, it' s fairly clear that we’re not going to be anywhere near the level of economic growth needed to replace the jobs that were lost in the 'Great Recession.'" As for the politics, he notices that "If the Fed's forecast is generally accurate, then we would be in the middle of a modest recovery by the time the 2012 General Elections roll around. ... Ordinarily, a growing economy inures to the benefit of the incumbent," but he's not so sure it's a done deal.
  • Not So Great for Obama, decides The Washington Post's Ezra Klein, who thinks, in particular, "if the Fed's projection proves optimistic ... the White House could be facing a serious uphill climb." To be more specific: "It's not impossible that Obama could win with those numbers, but it's not a sure thing, either."
  • Really Hard to Predict What This Means for the Election--Campaigning Will Matter  Jay Cost at The Weekly Standard points out that though "we know for sure that the economy influences political outcomes ... it is hard--very hard--to isolate the effect of any one variable." So, while unemployment matters, "there is no statistically significant relationship" in recent years "between unemployment in November of election years and the incumbent president party's margin of victory/defeat." He thinks a lot will depend on Republican campaigning:
Here's my take. The economy is a very important factor in presidential elections (duh!), but voters form holistic judgments about it that are not reducible to a line on a chart. ... They vote on a general, diffuse sense of where the economy has been, where it is headed, and how much credit/blame each side deserves for the situation.  ... What we appear to be headed for by November 2012 is an economy that is not as weak as it is now, but still not as strong as it could be, especially in terms of the labor market. To me, that signals a political gray area, one in which evaluations of the two major party candidates could be determinative. ... By 2012, I think Republican salesmanship is going to be a critically decisive factor in the outcome. 
  • So Why Isn't Anyone Doing Anything?  For Steve Benen, the big political question here is why politicians aren't seeing the revised estimates and trying again to stimulate the economy.